Most of Market Street property slated for auction on May 14

Published: Wednesday, March 27, 2013 at 5:02 p.m.

Last Modified: Wednesday, March 27, 2013 at 6:01 p.m.

The owner of Market Street at Heath Brook, which filed for Chapter 11 bankruptcy protection in January, is auctioning off the bulk of the 60-acre outdoor mall off State Road 200 as part of a foreclosure compromise.

Absent the auction will be the 11.4-acre Dillard's Inc. property, which the department store conglomerate purchased earlier this month.

The auction is slated for May 14 in Tampa as part of a deal between Market Street's owner, The Ocala Shoppes LLC, and Bank of America, which claims it's owed more than $130 million in unpaid loans, fees and late charges.

The deal between the two parties allows Miami-based commercial real estate company Holliday Fenoglio Fowler, L.P. (HFF) to auction the property west of Interstate 75 on behalf of Ocala Shoppes, according to federal bankruptcy court records.

Chapter 11 allows for Ocala Shoppes to restructure its business and pay off a portion of its debts as it liquidates assets.

Representatives from Ocala Shoppes' parent company, United American Realty Corp., did not return telephone calls for this story. It's uncertain how much of the money from the auction will go to Bank of America.

The auction deal ends any disputes between Ocala Shoppes and Bank of America regarding the amount of money owed to the bank due to the foreclosure, according to the bankruptcy documents. The highest auction bidder would own Market Street without any liens against the property.

The 684,000-square-foot retail plaza was one of six Florida outdoor retail properties built by United American, according to that company's website. An additional center is in Georgia.

Anchored by major tenants Dillard's and Dick's Sporting Goods, the 5-year-old shopping complex has struggled to lease many of its smaller retail slots.

Dillard's did not return telephone calls for this story.

Marion County court records show that Mercantile Operations, Inc., which Dillard's purchased in 1998, bought the 126,200-square-foot Dillard's building this month for $1 million.

Robert Saracco, HFF senior analyst, would not discuss the coming auction, but said Dillard's was not included in the sale.

Once bidders register for the auction, additional information about retail leases Ocala Shoppes holds with tenants will be made available, according to HFF auction literature.

Ocala Shoppes completed the outdoor mall in 2008, borrowing $102 million beginning in 2006 from Merrill Lynch Capital. The recession followed soon after that, as well as the devaluation of both residential and commercial properties. Rumors of the outdoor mall's financial problems began almost as soon as construction was completed.

Marion County foreclosure records indicates those rumors were mostly true.

According to court documents, Bank of America said Ocala Shoppes failed to make timely payments on the debt and failed to pay when the loan matured in May 2010.

Saracco said he anticipates ample interest from buyers wanting to bid on the property.

"In general, there aren't any distressed sales anymore," Saracco said during a telephone interview.

He said that most financially strapped or bank-owned properties of equivalent size have already been sold.

"Any deal now where you have a distressed (property for sale) will generate a lot of interest," he said.

Bartow McDonald, managing director of Sperry Van Ness in Ocala, said the pending auction and Dillard's recent purchase are both positive signs for the retail and commercial markets.

The Dillard's purchase suggests a long-term commitment by the retail giant to stay at the location, he said.

And once the new owners take over the rest of the outdoor mall — at a fraction of the original $102 million cost — they will be able to offer reduced lease rates and attract more tenants, McDonald said.

Contact Fred Hiers at 867-4157 or fred.hiers@starbanner.com.

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